Decision Trees goes Ethiopia

How the Munich-based optimization specialist is improving the water management of an African growth champion


When thinking of hydropower, most people will probably imagine pumped storage powerplants in the Alps or run-of-river power plants along the major European rivers.

One country, on the other hand, that few people are likely to associate with this renewable energy source is Ethiopia. While the African state is known to many only as the birthplace of coffee or perhaps as the site of major famines, it has made a remarkable economic leap in recent years. The foundation of this development for many years now has been an intensely driven expansion of hydropower.

As a result, Ethiopia has a great need as well as vast potential for the optimization of power plants and the transmission network. The main goal of optimization for most European power plant operators is usually maximizing profits. However, for the Ethiopian power plant and transmission and distribution system operator, the focus is on fundamental considerations such as making the most efficient use of available water and ensuring the widest possible availability of power services.

Given the crucial importance of a reliable energy supply to the population and to the country’s development, we are pleased that we have been able to successfully support the Ethiopian state utility Ethiopian Electric Power for several months now with our expertise. In this article we will therefore discuss the progress Ethiopia has made in recent years and how this has led to Decision Trees modelling and optimizing parts of the African state's hydropower infrastructure.

From a state in crisis to a rising star

Thanks to ambitious infrastructure projects, Ethiopia has experienced rapid economic development in recent years and is developing steadily into an emerging market. Within just ten years, the country has advanced from Africa's poorhouse to the continent's new rising star. Since 2005, the country's economy has been growing on average between eight and ten percent per year. This makes it one of the fastest growing economies in the world in recent years.

Other figures also show the rapid development the country has experienced in recent years. For example, child mortality has fallen dramatically in the past two decades. While the school enrollment rate was already at an impressive 85 percent in 2015, the proportion of people living in extreme poverty fell to 26 percent. This development has been accelerated in recent years by the new Prime Minister and Nobel Peace Prize winner Abiy Ahmed, who has made it his goal that by 2025 Ethiopia will no longer be classified as a developing country.

In the fast lane with 5-year plans and internationalization

In planning the upswing, the government relies on five-year plans that help it define and implement priorities. Growth and Transformation Plan II (GTP 2), which runs until the end of this year, is the fourth development plan since 1995.

GTP 2, now in its final stages, is particularly focused on expanding infrastructure in order to attract foreign investment. State-subsidized industrial parks in particular serve as a means of attracting foreign investment. The government plans to increase the number of these facilities from the current ten up to thirty by 2025.

The country's expansion into the global market with the help of these parks has so far proven to be a great success. Ethiopia, three times the size of Germany in terms of area and after Nigeria the most populous country in Africa with 90 million inhabitants, is now one of the five largest economies in sub-Saharan Africa with a GDP of 91 billion USD.

Growing hunger for electricity and ambitious plans for power plant expansion

Analogous to the booming economy and population, the hunger for electricity is also experiencing steady, strong growth. While in 2014 only about 27% of households had access to electricity, this figure had risen to nearly 60% by mid-2016. As a result of growth and progress, the Ethiopian government expects the country's energy demand to grow by 30% annually. This results in an enormous demand for new power plants. Nevertheless, the country focuses almost exclusively on renewable energies.

This is because one aspect of the country's plans for economic growth and infrastructure expansion is also to produce electricity in the country in a climate-neutral manner and, in the future, to trade and export it. The country benefits from extremely favorable geographical conditions, which allow the generation of diverse forms of renewable power.

Hydropower as the cornerstone of state energy supply

Hydropower in particular plays a central role in the current government's plans to meet the growing demand for electricity. Even though the Blue Nile, Ethiopia's largest and most important river, accounts for half of the country's potentially usable hydropower, it supplies comparatively few hydropower plants due to geographical limitations. This is aggravated by complaints from neighboring countries, especially Egypt, who fear that hydroelectric powerplants could affect their own water supply.

Since Ethiopia is very mountainous, however, there are sufficient alternative possibilities for hydropower generation. Thanks to the comparatively high rainfall, hydroelectric power plants are concentrated on the southern and western regions and in the center of the Abyssinian highlands.

According to the extremely ambitious electrification program, the installed capacity from hydropower alone should have increased fivefold from about 2,000 MWe to 10,000 MWe in the period 2009-2015.

However, this target has not yet even come close to being achieved. At present, the total installed capacity of the hydropower plants is 3,821.6 MW. In particular, the completion of the Gilgel Gibe III hydroelectric power plant has helped to relieve the pressure. Located about 300 km southwest of the capital Addis Ababa, with a capacity of 1,870 MW, this power plant is currently the largest in the country and the second largest hydroelectric power plant on the continent after the Aswan Dam.


The Grand Ethiopian Renaissance Dam - a controversial prestige project

The greatest hope for Ethiopia's electricity supply rests on a truly massive dam project still under construction - the Grand Ethiopian Renaissance Dam (GERD), scheduled for completion in 2022, which has recently been in the news due to disputes with neighboring countries.

The power plant, which has been under construction since 2011, with a planned nominal maximum capacity of 6,000 MWe, is a national prestige project. The fact that the country's hopes rest on it is evident not least from its Ethiopian name, which translates as "Great Dam of Ethiopian Rebirth".

Due to the disputes with surrounding countries and the resulting legal situation, the project has had to be paid for entirely by the Ethiopian government alone and therefore consumes a large part of the national budget. The long-standing conflict over the water of the Blue Nile, the region's lifeline, recently reached the boiling point when the Ethiopian side began filling the GERD reservoir. Neighboring states are suspicious, since the speed at which this is happening has a direct influence on how much water flows into Sudan and Egypt. More than 100 million people depend on water supplies from the Blue Nile, making the dam more than a means of generating electricity.

Once completed, GERD will be the largest (hydro) power plant in Africa, although experts estimate that it will only produce around 3,000 MWe on average per year due to the average flow velocity of the Blue Nile.

Great need for optimization of the complex power plant landscape

In addition to the cost- and time-intensive construction of new power plants, the Ethiopian government is increasingly focusing on the optimization of existing hydropower plants.

The motives for optimizing the Ethiopian generation fleet differ significantly from those of European power plant operators. Since European operators do business in an environment with a fully developed transmission network and established power markets, the focus of optimization in most cases is clearly on maximizing profits. In Ethiopia, on the other hand, the primary goal is to minimize water losses. Overflows should be avoided and turbines should be operated with the best possible efficiency. GERD is also a good example of the differing requirements - for example, an optimization is needed to allow for the best possible management of this power plant while guaranteeing certain flow rates so that downstream countries are not affected by the dam.

At the same time, the optimization of the country's entire power generation system is a key issue - on the one hand, this involves determining the locations of planned new hydroelectric power plants and how an ideal choice of location minimizes the distance to consumers in order to avoid line losses. On the other hand, it is already clear that Ethiopia's enormous electricity needs cannot be met exclusively with the help of hydropower. For this reason, efforts to diversify the country's renewable energy sources have been underway for some time now. However, to achieve this, their integration must also be taken into account and optimized in advance on the basis of models for expansion planning. 

In view of the complex power plant landscape and the widely dispersed transmission network, this is a considerable logistical challenge.

Munich optimization expertise for Addis Ababa

It quickly became clear to those responsible at Ethiopian Electric Power, Ethiopia's state-owned power plant and transmission system operator, that they would need proven experts to model and optimize this enormous system. Their eyes soon turned to Europe, given the considerable depth of experience in this field there. It was here that the search for experts in the optimization of complex power plant parks and transmission systems soon led to Decision Trees.

Within the scope of the project, which is still underway, a test system was set up to map and optimize parts of the generation fleet. These include a cascade of the Gilgel Gibe III power plant system. Thisis a first step, but much more is needed before the focus of optimization in Ethiopia, too, can be shifted primarily to maximizing profits.


Screenshot of one of the cascades of the Gilgel power plant modelled in DT.Energy

Georg Ostermair, Founder of Decision Trees elaborated, "This is not an everyday project and, in view of the numerous associated implications for the further development of Ethiopia, it is certainly a very special challenge. But given the unique scope of the project, we did not have to think twice when we were asked if we could support Ethiopian Electric Power with our optimization expertise.

Even though the project has not yet been completed, it is already clear that we have made great progress and, on the basis of our models and optimizations, line losses have already been significantly reduced and the management of hydropower plants has been considerably improved. We’re especially pleased with the potential that our models may have for the further expansion planning of the country.

It is a privilege to be part of this exciting and far-reaching transformation that Ethiopia has been engaged in for several years now. In particular, visiting the country and exchanging ideas with the people responsible in the field has made me very aware of the great impact this process is having on the country and its people.”

Talk to our experts

Find out what stochastic optimization can do for you.
Thank you for your request. Our experts will get back to you shortly to show you the benefits of stochastic optimization.
Oops! Something went wrong while submitting the form.
Back to updates